Planning Is an Essential Business Element

And the effort can be extended on an external basis, using the help of trusted allies, leading to more flexibility in customer response — from 

This chapter focuses on this currently most advanced form of planning and scheduling and how it has become much more than a planning tool. It is at the heart of establishing an extended enterprise network for firms working for the same purpose — building new revenues among better-satisfied customers. Special thanks go to Larry Lapide, VP at AMR Research, and Jeffrey Sica for their help with this chapter. 

To put this tool into perspective, we should begin by reviewing one aspect that occurs within most supply chains, a phenomenon originally noted by Professor Hau Lee of Stanford University. Lee called attention to the fact that a bullwhip effect can be observed as upstream partners in a supply chain experience erratic, volatile demand patterns brought on by consumer signals being passed through multiple links — retailers, distributors, wholesalers, and manufacturers — on their way to the primary suppliers. 

When a consumer change occurs, it becomes like the crack of a whip and the effect moves through the linked partners. At each link, responses are made, especially to planning and inventories. Along the way, the 

As firms began to consider the need for such a connective system, attention moved to how the company can extend its S OP activities from manufacturing facilities and warehouses to suppliers, distributors, and key customers. The historical tendency was to keep the focus on a make-to-stock orientation and use S OP as the link between internal operations and finished goods in the warehouse. Suppliers were only considered in terms of lead times, filling bills of material (BOMs), and their ability to respond to emergency needs. In the new environment, the attention moves to how suppliers can play a key role in the overall efficiency of the interenterprise network and reduce the bullwhip effect. 

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